Oppenheimer International Bond Fund

Scorecard
2 / 5 Stars
Lipper
3 3 1 3 3
Zacks Investment Research
4 (Sell)
Standard & Poor's
1 / 5 Stars
TheStreet.com
E- (Sell)

U.S. News evaluated 99 World Bond Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Note: Profile written for different share class.

Performance

The fund has returned -3.61 percent over the past year, 1.21 percent over the past three years, 5.55 percent over the past five years, and 5.25 percent over the past decade.

Trailing Returns Updated 03.31.2014
Year to date 0.9%
1 Year -3.6%
3 Years (Annualized) 1.2%
5 Years (Annualized) 5.6%
10 Years (Annualized) 5.2%

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Summary

The Oppenheimer International Bond Fund is a flexible global bond fund with a steady track record.

As of April 22, 2014, the fund has assets totaling $9.33 billion. Its portfolio consists largely of bonds issued by foreign governments and corporations.

In 2009--well before the debt crisis blew up--the fund benefited from some opportunistic moves in Europe, as yields in Italy, Greece, and Spain became particularly attractive relative to Germany. But as spreads normalized later in the year, the fund sold off some of these positions and returned to its normal weighting, which in the eurozone favors countries like Germany and France. Meanwhile, the fund has maintained its preference for emerging markets, focusing on those that have high real rates of interest. Among emerging markets, management has shown enthusiasm for Brazil. While exposure to emerging markets has generally helped returns, it weighed on performance in 2008 as the downturn extended its reach to all corners of the market. The fund has returned -3.61 percent over the past year and 1.21 percent over the past three years.

Over time, the fund has stayed nimble and enjoyed solid returns. In particular, it has benefited from its flexible approach. Aside from strong bond picks, it also makes notable use of complex currency bets. Management relies on a complex set of indicators to decide on currency weightings and makes currency moves separate from decisions on bond holdings. "The fund . . . takes on substantial developed and emerging-markets currency risk and makes substantial use of derivatives to take currency and country exposures," says Morningstar. The fund has returned 5.55 percent over the past five years and 5.25 percent over the past decade.

Investment Strategy

According to the fund's prospectus, "In selecting securities, the fund's portfolio manager evaluates the overall investment opportunities and risks in individual national economies. The portfolio manager analyzes the business cycle in developed countries, and analyzes political factors and exchange rates in emerging market countries. The portfolio manager currently focuses on the following factors, which may vary in particular cases and may change over time: Opportunities for higher yields than are available in U.S. markets [and] opportunities in investments denominated in foreign currencies that compare favorably to the U.S. dollar."

Role in Portfolio

Morningstar calls it a "supporting player."

Management

Arthur Steinmetz has been a manager since 2004, and Sara Zervos came on board in 2009.

Fees

Oppenheimer International Bond Fund has an expense ratio of 1.85 percent.

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Risk

According to the fund's prospectus, "The fund is designed primarily for investors seeking total return over the long term and some income from a fund that invests mainly in foreign debt securities. Those investors should be willing to assume the risks of short-term share price fluctuations of a fund that focuses on debt investments in foreign securities, particularly those in emerging markets."

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